American Airlines Keeps Two Credit Card Providers. Why That’s Good For You

Credit cards are such a big part of the airline loyalty programs.  More people earn the majority of their miles from credit card spend versus actually flying.  Whether that continues in the future remains to be seen, but it’s likely to remain the status quo for a while.

Airlines sell boatloads (plane loads?) of miles to their credit card partners as part of those relationships.  As credit card miles have grown in popularity, so have the value of the contracts the banks enter with their airline partners.

United and Delta had already negotiated new contracts with their bank partners.  American Airlines has had two relationships since the merger with US Airways.  American has been partners with Citibank since the early days of loyalty programs, where US Airways’ relationship was with Barclaycard.

As the merger progressed, the relationship with the respective banks changed a bit.  Barclaycard wasn’t allowed to issue new cards anymore, but they rolled out a new premium card that they could upgrade existing customers to.  That was a plus for folks who seek elite status, as it guaranteed there would be two cards that members could earn elite-qualifying miles with.

American kept sending out obvious signals that change was coming to their credit card relationship.  Scott Kirby mentioned more than once in an earnings call how American was at a competitive disadvantage to their peers because of weaker co-branded credit card deal.  We’ve all been waiting for that renegotiation to see who the winner would be.

It turns out it’ll be both Citibank and Barclaycard continuing to issue credit cards, which means Barclaycard gets to start issuing cards again.

As View From The Wing notes:

American has entered into new agreements with both Citi and Barclaycard US. The agreements will allow Citi to continue offering its lineup of cards to new customers through multiple exclusive channels such as digital – including aa.com – mobile, direct mail, and Admirals Club lounges.

The agreements will also allow Barclaycard US, the payments business of Barclays in the United States, to offer its cards to new customers in airports and exclusively during flights beginning in January 2017.

It’s certainly not a solution I would have expected, but it’s an interesting one nonetheless.  I think Gary’s right in how this came to be.  American likely asked for more money than either Citibank or Barclaycard was willing to pay for exclusivity.  The final deal appears to be a nice save on American’s part to increase the size of the commitments.

This Is Good For Frequent Travelers

United doesn’t currently offer a credit card that allows travelers to earn elite-qualifying miles (PQMs in the UA world) for credit card spend.  They have offered such cards in the past; I still carry one.  I think the lack of a PQM offering right now is a byproduct of United trying to trim their elite ranks.  Delta offers the ability to earn MQMs from more than one credit card.

American is likely to continue offering the ability to earn EQMs from both the Citibank and Barclaycard products, which means frequent travelers should be able to continue earning up to 20,000 EQMs from credit card spending.  Considering that the highest level of elite status, Executive Platinum, requires 100,000 EQMs, being able to get 20% of them from credit card spend makes status much more achievable for folks who can focus their credit card spending.

I’m biased, because elite-qualifying miles from credit cards that are precisely the reason I can maintain elite status with two separate airlines.  Without these miles, I wouldn’t be able to maintain elite status on both American and United.

Competition Likely Means Better Offers For Customers of American Airlines

The Citi Executive card had 100,000 mile sign-up bonuses the last time American renegotiated their agreement with them and shut out American Express.  Now that Barclaycard can issue cards again, they’re competing with Citibank for new customers.  Even though they can’t offer cards in the same channels, they’re still fighting over the same customer base, so I wouldn’t be surprised to see sign-up bonuses increase again.

It wasn’t until last year that I can recall seeing the first targeted spending promo from the Citi Executive card.  It was just a few months later that another offer appeared.  Things have been a little quieter since, but the possibility of additional benefits due to competition is an increased possibility.

Just Two More Pennies

I prefer American Airlines to United and Delta. There was a time when I would have said that American was head and shoulders above the rest, but they’ve come back to the pack with the introduction of revenue-based earning and chopping the number of systemwide upgrades Executive Platinum members earn.

But, I still prefer American.  It’s more of a personal preference than a clear-cut increased value proposition given my travel patterns.  And, the ability to earn 20,000 EQMs from credit card spending means I’m still likely to want to qualify for Executive Platinum again in 2017.

That being said, the introduction of a 75,000 mile level at American, matching United and Delta, might lead to a strategy for me to maintain that level at both American and United next year, which means I’d only need 55,000 EQMs from flying if I max out the two credit card offers.

I’m hoping two card issuers leads to increased sign-up bonuses and better promotions, and I’m really hoping that both continue to make it possible to earn EQMs.

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